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| Post Office to launch 'value for money' current account | Post Office to launch 'value for money' current account |
| (9 months later) | |
| The battle for your current account is set to heat up after Post Office announced plans to enter the market over the coming weeks. No details of the account are available yet, but it stressed it would be offering "value for money". | The battle for your current account is set to heat up after Post Office announced plans to enter the market over the coming weeks. No details of the account are available yet, but it stressed it would be offering "value for money". |
| Nick Kennett, director of financial services at Post Office, said: "We have carried out extensive research and the findings tell us that customers want simplicity, transparency and good value for money. | Nick Kennett, director of financial services at Post Office, said: "We have carried out extensive research and the findings tell us that customers want simplicity, transparency and good value for money. |
| "With more than 11,500 branches, which is more than all the UK banks combined, we can provide this through the most convenient and accessible retail network in the UK." | "With more than 11,500 branches, which is more than all the UK banks combined, we can provide this through the most convenient and accessible retail network in the UK." |
| The account will initially be launched in a small number of branches, before a wider roll-out next year, and would-be customers can register their interest online at postoffice.co.uk/currentaccounts/register. | The account will initially be launched in a small number of branches, before a wider roll-out next year, and would-be customers can register their interest online at postoffice.co.uk/currentaccounts/register. |
| The move is a return to current account banking by Post Office, which was the home of the state-owned Girobank for two decades until its sale to Alliance & Leicester building society in 1990. | The move is a return to current account banking by Post Office, which was the home of the state-owned Girobank for two decades until its sale to Alliance & Leicester building society in 1990. |
| At its peak, Girobank received one in every three pounds deposited in cash at British banks, and at the time of its sale it was the sixth biggest provider of current accounts in the UK. The Girobank name was eventually phased out in 2003, by which time Alliance & Leicester had demutualised. | At its peak, Girobank received one in every three pounds deposited in cash at British banks, and at the time of its sale it was the sixth biggest provider of current accounts in the UK. The Girobank name was eventually phased out in 2003, by which time Alliance & Leicester had demutualised. |
| Since then, Post Office has allowed other high street banks to operate services through its counters. A spokesman for Post Office said: "We have a very good working relationship with our partner banks and we have notified them of our intention to launch a current account. We don't anticipate any changes." | Since then, Post Office has allowed other high street banks to operate services through its counters. A spokesman for Post Office said: "We have a very good working relationship with our partner banks and we have notified them of our intention to launch a current account. We don't anticipate any changes." |
| Kevin Mountford, head of banking at comparison website MoneySupermarket, said the announcement had taken the industry by surprise, with most people expecting either Tesco or Virgin Money to be the next big player to enter the market. | Kevin Mountford, head of banking at comparison website MoneySupermarket, said the announcement had taken the industry by surprise, with most people expecting either Tesco or Virgin Money to be the next big player to enter the market. |
| Mountford said the timing was good for Post Office, as anti-bank sentiment is creating an appetite for challenger brands, while the introduction of seven-day switching later in the year will give people more confidence about moving their accounts. | Mountford said the timing was good for Post Office, as anti-bank sentiment is creating an appetite for challenger brands, while the introduction of seven-day switching later in the year will give people more confidence about moving their accounts. |
| "The question is, what product will it go for? Will it be rate led with high in-credit interest or low overdraft interest; service led like Metro bank, for example; or will it offer some kind of incentive like £100 to switch?" asks Mountford. | "The question is, what product will it go for? Will it be rate led with high in-credit interest or low overdraft interest; service led like Metro bank, for example; or will it offer some kind of incentive like £100 to switch?" asks Mountford. |
| It is also unclear whether it will be a paid-for account. Mountford suggests Post Office could go down that path, offering enhanced deals on some of its existing services in return, for example, for better rates on savings or foreign currency exchange. | It is also unclear whether it will be a paid-for account. Mountford suggests Post Office could go down that path, offering enhanced deals on some of its existing services in return, for example, for better rates on savings or foreign currency exchange. |
| Andrew Hagger of MoneyComms says there was a lot of excitement last year when Marks & Spencer said it was launching current accounts, but enthusiasm waned when it emerged it would charge £15 or £20 a month. | Andrew Hagger of MoneyComms says there was a lot of excitement last year when Marks & Spencer said it was launching current accounts, but enthusiasm waned when it emerged it would charge £15 or £20 a month. |
| However, competition is growing in the market, in the run up to the changes in September which will force providers to complete switches within seven days, and offer a guarantee that customers will not suffer if there are any errors. | However, competition is growing in the market, in the run up to the changes in September which will force providers to complete switches within seven days, and offer a guarantee that customers will not suffer if there are any errors. |
| This week, Nationwide building society has been heavily promoting its current accounts, with huge adverts for FlexDirect in many newspapers. The account offers 5% AER on in-credit balances up to £2,500, payable for a year, and is one of three separate deals offered by the society as it attempts to win 10% of the current account market. | This week, Nationwide building society has been heavily promoting its current accounts, with huge adverts for FlexDirect in many newspapers. The account offers 5% AER on in-credit balances up to £2,500, payable for a year, and is one of three separate deals offered by the society as it attempts to win 10% of the current account market. |
| Santander has enhanced its 123 Current Account in recent weeks by giving holders access to a cash Isa paying 3%, while First Direct is still offering switchers £100, and Halifax has a £50 incentive and fee-free overdraft deal. | Santander has enhanced its 123 Current Account in recent weeks by giving holders access to a cash Isa paying 3%, while First Direct is still offering switchers £100, and Halifax has a £50 incentive and fee-free overdraft deal. |
| The eventual arrival of Tesco and Virgin Money is likely to shake things up further. Asked about the timing of its launch, a spokesman for Tesco Bank says: "As we have said for some time, we will develop the right current account proposition for Tesco customers and will enter the market once the seven-day switching service is established." | The eventual arrival of Tesco and Virgin Money is likely to shake things up further. Asked about the timing of its launch, a spokesman for Tesco Bank says: "As we have said for some time, we will develop the right current account proposition for Tesco customers and will enter the market once the seven-day switching service is established." |